Bonus shares are additional shares given to the current shareholders without any additional cost, based upon the number of shares that a shareholder owns. These are company's accumulated earnings which are not given out in the form of dividends, but are converted into free shares.

Who is eligible for bonus shares?

Bonus shares are usually announced by the company with a record date, the date which is considered for the bonus shares. All the investors holding the shares on the record date are eligible for bonus shares. Company usually gives bonus shares as a substitute of dividend payouts

What is the difference between bonus issue and stock dividend?

Stock dividend is a bonus issue, allotted by the company to reward the shareholders. and The bonus shares are free shares that the shareholders receive against shares that they currently hold. These are issued out of the reserves of the company. Stock Dividend is also known as Bonus shares.

What is the meaning of 1:2 bonus?

A bonus issue is a stock dividend, allotted by the company to reward the shareholders. The bonus shares are issued out of the reserves of the company. ... If the ratio is 2:1 ratio, the existing shareholders get 2 additional shares for every 1 share they hold at no additional cost.

What is 2:1 bonus?

Bonus shares are issued in a certain proportion to the existing holders. A 2 for 1 bonus would mean you get two additional shares — free of cost — for the one share you hold in the company.If you hold 100 shares of a company and a 2:1 bonus offer is declared, you get 200 shares free